Research concludes that Intermediate Technology Institutes were a failure

RESEARCH from three leading Scottish universities has found the Scottish government’s technology start-up initiative was an massive failure.

Dr Ross Brown from the School of Management, University of St Andrews led the research with help from a team of entrepreneurship researchers from the Universities of St Andrews, Glasgow and Edinburgh.

They looked at the Scottish Government funded innovation initiative -the Intermediate Technology Institutes (ITIs) which was created to produce new high-technology start-ups and to dramatically increase the levels of business expenditure on research and development (R&D).

University of St Andrews where Dr Ross Brown led the research

The ITIs, which were launched in 2003 by Scottish Enterprise with a budget of £450m, was terminated in 2010.

The researchers concluded that the ITI badly malfunctioned; chronically failing to deliver the economic objectives envisaged by Scottish Enterprise and the Scottish Government. The ten year programme produced very little of the expected commercial outputs, such as new tech start-ups and licensing revenues, and was prematurely terminated by Scottish Enterprise in 2010.

In the first independent and objective assessment of the initiative, the research examined the reasons for this policy failure.

Commenting on the publication of the findings, Dr Ross Brown from the stated: “The ITI programme was based on an outdated linear view of innovation.

“The critical stumbling block behind the policy’s failure was the inability of policy makers to properly diagnose the nature of structural problems within the Scottish entrepreneurial ecosystem.”

Co-author Dr Geoff Gregson from the University of Edinburgh stated: “We identified a number of factors contributing to ITI underperformance: the research undertaken was too ‘far from market’, fitted poorly with the innovation needs of Scottish SMEs, had too many restrictions in terms of the usage of the intellectual property (IP) and the licensing conditions were prohibitively expensive.”

The authors of the study said they were concerned that Scottish policy-makers may not have fully absorbed the lessons from the failure of the initiative.

Professor Colin Mason from the University of Glasgow who also worked on the project said: “Lessons need to be learnt to prevent similar and costly policy failures being repeated.

“This entails being open with external researchers and stakeholders with information and data to further our understanding of the performance of policies and, crucially, the causes of failure.”

Dr Brown added: “While policy failures in the sphere of innovation policy are numerous and costly, such failures are rarely acknowledged by policy makers, as was the case of the ITIs. Arguably, this prevents the ability to learn from past mistakes.”

In terms of future policy, Dr Gregson added: “Innovation policy makers need to become less focused on generating the supply of new IP and more focused on increasing the ability of Scottish SMEs to undertake innovative activities and to absorb external sources of knowledge.

“A critical mass of innovative SMEs will provide more of a seed-bed for new tech start-ups than policies to stimulate and protect new IP.